Microeconomic Analysis: The Walt Disney Company Why

Microeconomic Analysis: The Walt Disney Company

Why Walt Disney?

Just a mention of the name, "Walt Disney," stirs up images in the minds of nearly every individual in the western world. From movies to merchandise, theme parks to cruise lines, the Walt Disney Company has been able to create a distinct niche for itself in a variety of markets -- a feat that is certainly no easy task. Headquartered in Burbank, California, The Walt Disney Company is an American multinational media conglomerate, and is the largest media conglomerate in the world in terms of revenue (Siklos, 2009, 1). While, like many American corporations, the Walt Disney Company has had its low-points throughout the years, as well as having been hit by the lingering economic crisis, the fact remains that Walt Disney has consistently remained a company that has the ability to weather any storm. Since its inception as a company in 1923, the Walt Disney name has brought with it an air of relevance and profitability (Disney, 2012, 1). Its ability to remain a dominant force in the American economic landscape, as well as a distinct presence in the world market makes the Walt Disney Company an exceptional example of success in the economic market, especially in viewing the company from a microeconomic basis. The idea of tradeoffs is fairly simple: we always give something up to get something else

Economic Ideas and Walt Disney

The Walt Disney Company is one that has utilized many different economic tools and strategies over the years, and in viewing the microeconomic concepts of price and technology as a factor in production, one can easily see how each of these concepts played a role in the economic decision-making of the Walt Disney Company throughout the years.

The concept of price is simply an understanding of what buyers and sellers are willing to exchange in order to compensate each other for a transfer of resources from one to another. Clearly, the Walt Disney Company operates solely under the "sale" of its products to consumers. Whether through the purchase of a park admission ticket, the booking of a Disney Cruise, or the purchase of Disney merchandise at any of its retail locations, the key to profit is the ability to set reasonable prices, which keeps customers coming back for more. One such example of pricing strategy within the Walt Disney Company can be seen in the company's pricing strategies on theme park admissions over the past decade. In 2005, Disney revamped its pricing structure to persuade travelers to make repeat visits to Disney's four theme parks during their vacations by making the added cost for extra visits negligible -- especially when compared with the price of a one-day ticket charged by competitors like Universal Orlando or SeaWorld Orlando (Garcia, 2011, 1). Such a strategy considerably boosted sales and stands as an example of effective pricing within the Disney Company.

Additionally, one can see the effect that technology, as a factor in production, has had on the company over the years. In viewing Disney film-making, hand drawn animation was the key to success for many years, and such animation was what put the company on the map within the film industry. However, as years moved on and technology increased, Disney's aversion to keeping up with technology proved significantly bad for business. In 1991, Disney began to get with the technological program, striking a $26 million deal with Pixar to revamp its films and adapt to the new technological market (Smith, 2011, 1).

In viewing the second "Big Idea of Economics," which states that we make choices in small steps, and that these choices involve incentives, one can see how this concept applies directly to the Walt Disney Company, especially in viewing its slow and steady expansion within the economic market from its inception in 1923 to today. The incentives that continuously draw the Disney Company to expand and move upward and onward is the garnering of new consumers and increased profits. Today, Disney thrives based on its "growth strategy," which involves gradual and quality changes to existing facets, such as additional cruise ships to its award-winning cruise line, to the groundbreaking of entirely new theme parks, all driven by the goal to reach new consumers (Rasulo, 2011, 1).